New name reflects broad care commitment
With a new moniker designed to reflect its broader commitment to health care, CVS Health is “positioned for today, preparing for tomorrow,” executives told Wall Street during its 2014 Analyst Day in December.
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“We expect that reform and demographic changes will increase the number of [insured] lives, and that will provide a long-term secular tailwind for the industry,” Larry Merlo, president and CEO of CVS Health, told analysts.
For 2014, total revenue in the pharmacy services segment increased 16.170 to $88.4 billion, fueled in part by specialty pharmacy, including the acquisition of Coram and the impact of CVS Health’s Specialty Connect offering rolled out in May 2014. Like Maintenance Choice, Specialty Connect connects mail and retail to provide choice and convenience for members.
For 2015, the company expects to generate roughly $37 billion in specialty revenues, up from an estimated $31 billion in 2014, Merlo explained.
CVS Health’s integrated PBM offerings are not only resonating with payers and translating into a growing list of new healthcare alliances, but the PBM business model has afforded the company a lever to help offset lost sales at retail, following its decision last year to pull the plug on all tobacco sales.
Despite the tobacco headwind, the impact on front-end sales was less than company executives anticipated and resulted in “no discernible” impact on its pharmacy business, the company stated in February.
The bold move to exit speaks to CVS Health’s larger mission as a health-and-beauty destination. Health and beauty has grown rapidly for the company with overall sales up more than 3070 over the past five years.
“Looking ahead, there are significant health-and-beauty opportunities we can tap into in the drug channel. Our market is poised between two worlds: the convenience sphere, which is the quick foods and general merchandise we sell, and the destinations sphere, which is all the health-and-beauty products that people associate with a drug store,” Helena Foulkes, EVP and president of CVS/pharmacy, told analysts.
Foulkes said the company has outlined five strategic themes to drive growth:
- Better health made easy
- Elevate beauty
- Customer-driven personalization
- MyCVS store
- Digital innovation
As part of the strategy, the company is looking to deliver a better in-store experience and showcase its healthcare expertise. For example, it is expanding OTC and making it an integral part of adherence and post-care support.
CVS/pharmacy also is bolstering its selection of on-the-go healthy food.
Beauty will get a facelift with exclusive offerings and enhanced merchandising. Over the next year, shoppers will see an upgraded cosmetics wall in many stores, a stepped up facial care look and feel, endcaps dedicated to beauty elevation, and an increased focus on naturals and healthy solutions.
“Our very best stores are going to get the full effect and a total revamp with all of the above and much more,” Foulkes told analysts.
The company also is leveraging Minute-Clinic in beauty, offering, for example, eyelash lengthening consultations and services.
The company’s MinuteClinic business operates 960 clinics, and over the past two years has opened more than 340 clinics, while entering 20 new markets. The goal is to operate 1,500 clinics by 2017.
In addition to the ongoing clinic growth, the company also is expanding its scope of services. Along with preventive and acute care services, MinuteClinic also is looking to provide chronic condition monitoring and various wellness programs.
Granting provider status could improve health outcomes
The mounting shortage of primary care physicians across the United States and the growing recognition that patients’ health care often is best delivered by a team of professionals working together are fueling a nationwide movement to give more pharmacists provider status.
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“As the healthcare system undergoes a major transformation in both finance and the delivery of services, states are focusing on improved quality and health outcomes,” National Governors Association executive director Dan Crippen said earlier this year when the group released “The Expanding Role of Pharmacists in a Transformed Health Care System,” a white paper suggesting ways states can make pharmacists a more integral part of the country’s healthcare delivery system.
Because medication management plays a central role in treating illness, the report stresses that making pharmacists part of chronic care delivery teams could go a long way to improving outcomes and reducing costs.
According to the National Alliance of State Pharmacy Associations, as of last September, 37 states grant pharmacists some degree of provider status. Thirty of these states provide payment to pharmacists for their services, with 17 covering services provided to Medicare patients and nine paying for Medicare medication therapy management. In addition, a handful of state-run Medicaid programs cover the cost of pharmacists’ services.
Pharmacy advocates say that lawmakers in Nebraska and North Dakota — two of the states that do not currently recognize pharmacists as providers — are considering legislation to give them this designation, while several other states are looking at extending pharmacists’ scope or allowing them to be more involved in patient care through collaborative practice agreements.
“The amount of patients having difficulty accessing health care has increased,” American Pharmacists Association SVP of pharmacy practice and government affairs Stacie Maass said. “It has created opportunities for other healthcare providers, and we think pharmacists are the perfect group to do this.”
“Pharmacists can help with many of the known problems in the current healthcare system,” she said. “When pharmacists are involved access is increased, quality is improved and costs are reduced.”
Telepharmacy is ‘next frontier’ of pharmacy practice
As community pharmacists take on a greater role in patient care, people living in remote rural areas often are unable to take full advantage of the services these professionals offer.
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In an effort to remedy the situation, a handful of pharmacy providers, technology companies and educational institutions have been developing sophisticated telepharmacy systems to ensure that even those living hundreds of miles from the nearest drug store can consult with a pharmacist.
Currently, about half of the states and Washington, D.C., allow telepharmacy, while more than a dozen others states are either considering it or have pending legislation to allow the practice.
“Telepharmacy services produce the same quality as the traditional mode of delivery and provide some value-added features that are not found in traditional pharmacy practice,” said Charles Peterson, dean of the North Dakota College of Pharmacy, Nursing and Allied Sciences and the director of the school’s decade-old ND Telepharmacy Project.
More than 80 pharmacies across North Dakota, and a portion of neighboring Minnesota, offer telepharmacy services, including more than 50 retail pharmacies and nearly nearly 30 hospital pharmacies.
One of the most active drug chains in the project is Thrifty White. The 91-store chain began offering telepharmacy in 2003 with a single site. Since then, it has expanded its effort to include eight sites in North Dakota and Minnesota. Operating in communities with populations of fewer than 1,000, Thrifty White’s telepharmacy sites offer patients the opportunity to video conference with a pharmacist and get medication therapy managment. Prescriptions at the telepharmacy sites are filled by technicians and verified by the consulting pharmacists at the central location.
Pharmacy executives and the providers of the techology behind telemedicine systems say the telehealth services have allowed patients living in these small towns to get a level of care they would not have otherwise been able to receive.
“Telepharmacy represents the next exciting frontier in the practice of pharmacy,” said Mike Coughlin, president and CEO at ScriptPro, one of the first companies to offer telepharmacy systems.